The Hindu Business Line : Banks catch'em young

Some of the banks said their customer base under children's schemes have almost doubled this fiscal. Children play a major role in most purchases, be it consumer durables or automobiles.

"It is certainly not seen by banks as a business but more as a loyalty building process," said Mr Varghese Thambi, Senior Vice-President and Head (Retail Banking), IndusInd Bank.

IndusInd Bank, one of the first to introduce a savings bank account targeted at minors, had a customer base of 50,000 in the fiscal ended March 2006, up from 25,000 a year ago. The minimum balance is Rs 11.

The balance in the savings bank account will be transferred to a recurring deposit (earning an annual interest rate of eight per cent) on the last day of every month, leaving Rs 100 in the account.

The average size of a children's bank account is Rs 2,000-3,000, said Mr. Thambi.

"There has been a 100 per cent growth in this segment," said a senior ICICI Bank official. He said the bank recognises the changing role of children in purchase decisions and wants to harness them into banking.

ICICI Bank's Young Stars account involves children and parents. "This account allows children, up to the age of 18 years, to learn and manage their finances while the account is operated and monitored completely by the parents," said the official.

According to the bank's Web site, interest earned on savings account balance gets credited on a half-yearly basis in September and March. The minimum average balance should be Rs 2,500 per quarter.

"The account is just another way of inculcating a habit of saving for my child. I deposit Rs 1,000 almost every month and tell my daughter that she can spend it when she grows older," said a parent with a 13-year-old daughter. The account is opened in the name of the minor under guardianship.

The parent or guardian can authorise ICICI Bank to issue debit card to the minor above the age of seven years to withdraw up to Rs 2,500 per day.

Not only parents, schools have also shown an interest in the idea. "ICICI Bank plans to take these products to schools through contact programmes that will educate children and talk to parents about the benefits of such an account," said the official.

IndusInd Bank organises talent tests among school students. Canara Bank and HDFC Bank also offer savings accounts for children.

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